Levelling of London house prices is 'necessary pit stop'
Mortgage Solutions Emma Lunn
The slowdown of house price growth in prime central London, from 3.1% last quarter to 0.5% in Q3 this year is a 'necessary pit stop' for a sustainable market, said one estate agency firm.
London-based agents Marsh & Parsons reassured the market that the subdued growth was not the death of price rises in the capital.
"We've reached a plateau in the course of house price growth, and the path paved out for London property prices for the rest of 2014 looks to be levelling off. This isn't terminal, but just a necessary pit stop in the long-term growth and sustainability of the market," said CEO Peter Rollings (pictured).
Marsh & Parsons is predicting that prime London house prices will remain stable until the end of the year.
The prediction followed a robust 11.4% climb in prime London property values over the past 12 months, equivalent to £163,973 per property. The last quarter has seen a sharp drop in the rate of quarterly price growth across the capital, and prices are predicted to flatten until the end of the year.
Rollings added: "And it doesn't mean we're in for a quiet winter either. Sales will continue, albeit at a more ‘normal' level, as buyers revel in the greater choice on offer, and without the frenetic competition many faced at the start of the year. With more realistic pricing sellers are prospering too, and on average 98% of the asking price is currently being achieved on properties sold."
Meanwhile Hometrack's new UK Cities House Price Index has revealed that house prices in London and Cambridge have increased by over £60,000 and £53,000 respectively over the past 12 months. In contrast, homes in Glasgow have only added £4,500 to their value on average.
Hometrack said the annual rate of UK house price growth was 9% in September, up just 0.1% from August (8.9%). London has driven the recovery in house prices over the last year, but the monthly rate of growth slipped to just 0.4% in September compared with 1% at its peak in April, reflecting weaker demand.
Richard Donnell, research director at Hometrack, said: "Expectations that strong house price growth in the south of England would ripple out across the country were over-done. While house price growth has increased across all cities in the last year the rate of growth in the majority of cities is below the UK average. There is little evidence of a runaway surge in prices and the rate of growth appears to be moderating.
"On a national level, the overall rate of UK house price growth has been significantly enhanced by London, so we are starting to see a corresponding dip in the rate of growth in the national figures as the rate of growth slows in London."